Sunday, March 7, 2004 3:31 PM
Do You Have What It Takes? (Part I)
by PimpSticky
Many people have the preconceived notion that the online
adult entertainment industry is a bottomless gold mine open
to all comers. For some there is the prevailing belief that
a cavalier attitude and a disregard for ethics is an acceptable
way of doing business. Many even believe that they will grow
rich from their online activities and retire masters of the
universe. The bullshit stops here.
The popular belief that making cash is as easy as picking
up seashells from the beach has attracted hordes of people
to the Internet. The mass media does a great job of sensationalizing
the industry because anything involving sex is sure to sell.
All of this hyperbole has lead to a saturated market place.
The proliferation of credit card scams illegal marketing
techniques and illegal content have attracted unwanted federal
attention.
Plus the cost of entry has risen in several sectors of the
industry and if trends continue it can be expected to increase
steadily.
A deadly addiction to the lifelines Visa and MasterCard
offer, have delivered the industry to the mercy of these
two financial giants. With seemingly new regulations being
issued almost every quarter one has to wonder if the sky
really is falling? This is nothing new to those of us honest
seasoned operators who understand that the industry has always
existed on the verge of one crisis or another. Yet lately
things seem to come in two's or three's take for instance
the latest round of new regulations was accompanied by new
federal laws plus an aggressive patent litigation by Acacia.
The common thought is that eventually the industry will
be consolidated with a few key companies offering the bulk
of sites based around the subscription model. While the traffic
generating operations will remain mostly unregulated and
cheaper to enter, thus suffering from increased saturation.
With the relentless flow of information available to webmasters
today it is unlikely any one company will dominate subscription
services. Especially with the prevailing attitude of “anything
you can do I can clone better” sites that are cropping up
by the dozen every day. Furthermore for true consolidation
to occur more companies would actually have to be publicly
traded.
This brings me to a little known fact about adult entertainment
in general It is Small Business the media hypes it up as
a huge enterprise but in reality it's a hodgepodge of independent
operators who have their own views on business. The average
companies are not making millions of dollars and most of
them couldn't even really be called true companies. Many
people eek out a living some live quite comfortably but most
still work in small teams and many work alone. The recent
outbreak of so-called “corporate sponsors” does not mark
any fundamental shift in the makeup of the industry as a
whole.
To put things into perspective for you our
industry as a whole is said to gross on average two to four
billion dollars a year. Compare this with the cheese industry
its annual gross is around twenty billion dollars a year.
Think about it you don't see much sensational media coverage
of cheese these days? But the tiny little adult entertainment
industry is full of buzz. My advice to you, DON'T BELIEVE
THE HYPE! When you enter into this business you are a small
business operator think about this.
In the first five years nine out of ten small businesses fail
in the next five years after that nine out of ten of those
small businesses fail. Most small business are improperly planned
from inception and not designed for longevity. Many companies
are based on partnerships that fail due to a lack of communication.
Some ventures are doomed from the start but it may take months
or years for the operator to go through the motions and figure
these things out. Poor tax preparation and business structure
may cost expenses that could have been avoided. Unrealistic
expectation and the inability to set deadlines and deliver
on them can cripple or kill an enterprise. The real question
is do you have what it takes?
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